Traders were cautious about the price gains as they said the tensions could be short-lived and that outflows from gold-backed exchange traded funds had only paused, rather than reversing.

They were also waiting for U.S. nonfarm payrolls report and the Federal Reserve's policy meeting later in the week for stronger trading cues.

"While the price break over $1,300 may be construed as positive for the bullion market, gains that have historically been boosted by bouts of rising geopolitical tensions tends to be fleeting and can be erased just as fast as they materialize," HSBC analysts said in a note.

Spot gold had risen 0.07 percent to $1,303.80 an ounce by 0327 GMT, after earlier hitting $1,306.11 - its highest since April 16.

Pro-Russian rebels paraded European monitors they are holding in eastern Ukraine, freeing one but saying they had no plans to release another seven as the United States and Europe prepared new sanctions against Moscow.

The rising tensions sent risk-averse investors scurrying out of global equities, and into safe-havens such as gold.

Investor sentiment towards gold has improved in recent days. Hedge funds and money managers raised their bullish bets in gold and silver futures and options, their first increase in five weeks, according to data from the Commodity Futures Trading Commission on Friday.

SPDR Gold Trust, the world's biggest bullion ETF, has not seen any outflows since April 22 though it hasn't seen any inflows either.

Markets are eyeing the Fed's policy statement on Wednesday and a U.S. jobs report on Friday to gauge the strength of the economy and the outlook for the U.S. central bank's stimulus measures.

In the physical market, premiums in India - the world's second biggest gold consumer - jumped to their highest level in more than 2-1/2 months due to short supplies.

Platinum and palladium gained as violence erupted in South Africa's strike-hit platinum belt on Sunday.

However, the end game to the 13-week strike seemed to be drawing near after the producers said they would take their latest wage offer directly to employees.

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